Founded in 1931, Kerala-based Federal Bank was forced to rapidly adopt digital technologies, especially over the past year when a majority of employees and customers had to work from home due to the pandemic. The company has close to 1.1 crore customers till date, many of whom are abroad. About 70% of all its digital transactions occur through mobile today and the bank has adopted a hybrid cloud strategy. In an interview, Jithesh PV, head of digital at Federal Bank, spoke about the company’s digital transformation journey and how neo-banking platforms have helped it increase its customer base. Edited excerpts:
How is technology upgradation impacting your core banking?
We had our branch automation software in 1994, and in 1996 we created our own banking application called Fedsoft. In 2016 we migrated the core banking to Infosys Finacle. All of the data has been moved into Finacle, so there is nothing that we can term as legacy systems. Most of the systems are being run on Finacle 10. Core banking is in-house, and we have business continuity and disaster recovery solutions in different locations. Customer data is all on-premise at our data centers in Kochi and Bengaluru, nothing is present on the cloud for our core banking.
Are you planning to move to the cloud eventually by adopting a hybrid or multi-cloud model?
Currently we don’t see the need for migrating the core banking-related applications to the cloud, though there are many supporting applications and customer facing applications which are hosted on the cloud. (For example) The Fedswagat application, which is used for booking appointments, is not directly linked to core banking. We make use of the cloud whenever new applications are coming in, so it is a hybrid strategy. Currently we have no plans of migrating core banking to the cloud, but some of the new systems like our new customer relationship management (CRM) platform will be hosted on a cloud environment. The Oracle CRM implementation is underway and will be live around March next year.
Can you provide some numbers in terms of payments growth, customer acquisitions?
Bill payments have increased by 40% over the last two years. From 2006, the overall digital share has grown from 48% to 88% for all transactions. In terms of acquisitions, we have implemented Aadhaar KYC in both biometric and one time password (OTP) based KYC. 91% of our accounts are opened through biometric-Aadhaar or E-KYC. A customer can go to the branch, use their biometrics and open an account in 3-4 minutes.
We have also integrated banking with a few fintech platforms in the market, specifically for neo banking, which is offered by Bengaluru-based neo-banking platform Fi and Mumbai-based fintech Jupiter. This has helped us to increase our customer acquisition rate by 50% over the past 3-4 months. We have 1.1 crore as of today and through neo-banking (type of a digital bank without branches) we are growing at around 8000 customers a day. Neobanking is one area through which we feel we can target more customers.
How is the Federal Bank utilising video conferencing to its advantage?
Right after covid, we built an application for customers called FedSwagat to book appointments with any branch to withdraw cash or open lockers. Then the Reserve Bank of India (RBI) came up with the video KYC (know-your-customer) service, which we utilised for customer identification and other use cases. A customer who wants to open an account today can directly visit the website, select the scheme of their choice, and open an account through video services. We also created a video chat facility for our non-resident Indian (NRI) customers who were unable to travel to India due to the pandemic. This facilitated the face-to-face interactions where NRIs would video chat with managers and employees of the bank.
How have chatbot services evolved over the past year?
In October 2020, we launched an artificial intelligence (AI) powered virtual assistant called Feddy. It is an omni-channel personal assistant, which can be utilized on WhatsApp, Amazon’s Alexa, Google Assistant, Google Messenger and (our) website. Currently Feddy answers questions by collating data available about the bank in the public domain. We are now developing the next phase where it should be able to do transactions. In this update fund transfers, mobile recharge and other bill payments should be carried out in the preferred channel of customers, including WhatsApp, Google Assistant or Google Business Messaging, and not necessarily through a mobile application. This is in the works and should be released by the end of December or early next year.